Repealing Puerto Ricos 1917 Bond Law / #finance #economy @whitehouse @ricardorosello

Photo by Puerto Rican photographer Fernando Ortiz

updated 9/26/17

One hundred years ago they began to be citizens of the United States of America. They have fought in all our wars, even on the front lines defending the very same freedom and liberties, the ideologies and sureties of a way of life prized and coveted by people the world over. Nineteen years prior to gaining citizenship, in the Spanish-American War of 1898, Spain lost control over the island, formally known by its indigenous population of Tainó native americans as, Borinquén. Jutting out of the Caribbean Sea, the smallest of the bigger islands, Puerto Rico has held a primarily geo-military value to the United States, yet it has also served as a cultural crossroads between Latin American culture and the English-speaking America. Much like Istanbul (old Constantinople) in the country of Turkey, Puerto Rico is a modern-day representation of the rich, cultural heritages that flow from the Spanish-conquest legacy, plus an American current which brought North American values and culture, paving the way for upgrades in infrastructure, education, goods and the flow of ideas. To date, per capita, Puerto Rico is one of the most internet-connected lands in the world, but even so, it is no stranger to the maladies that plague most latin american countries. It is an economy of cronyism, bloated government employment and limited job growth.

The technological infrastructure is in place, but the closed economic system is a prevailing economic negative force seeping into all segments of labor and social life. At the end of each week, the island collectively and famously sighs, calling for festivities to lighten the reality that:

1. around one million people have left the island for the U.S. mainland in search for economic opportunity
2. the largest employer on the island is the government with a outsized pension system weighing it down
3. foreign investment does not want to eagerly flow through unless the vast percentage of its capital can be repatriated 
4. all goods entering the island are slapped with a tremendous tax passed on to its consumers, effectively burning away disposable income from islanders which could potentially be reinvested smartly
5. entrepreneurial growth is stemmed because of the dearth of global and northern investment on an educated island that sways between bankruptcy and simply having enough to put on the family table
6. government debt is routinely serviced through the taking out of new loans creating a ‘catch-22’
7. decades of politically-sponsored government program meddling and laws have added to economic turmoil.

Photo by Puerto Rican photographer Fernando Ortíz

Could the 1917 Jones Act, which provided citizenship, and began the selling of bonds (debt) as well as placing a tax on all imported goods be the silent anchor weighing  down the island? Capital does not want to enter the island. Every creditor is demanding to be paid for bonds purchased. The 1917 law made it easy to buy bonds over the last century, up through 2017, and the islands constitution even instituted what it called, ‘La Promesa,’ to guarantee  payment on them. What has occurred is that the constant sale of these have created an ever tightening financial noose on any prosperity in the island, and in the face of the local government taking out loans to pay for this debt, national and foreign investment has turned away from entering the island.  In effect, each upstart of economic boost has been eyed as an entryway by bondholders and creditors to excise a return on their investment.

Presently, Governor Ricardo Roselló, has, along wth others, called for a reverse on prioritizing the payments of these debts in order to cover the basic needs of its residents. In contrast, debt holders emphasize the opposite with an acceleration of payments on debt. In essence, the governor argues that the ‘1917 bond law’ has the island in a downward monetary spiral and he connects this to the 1917 law..

Has the islands economy been legally exploited for a full century by outside interests? It seems to be that economic growth has stagnated under this bond debt. A visionary source who is a very close officer to one of the islands leading banks reports that this is the crux of the matter with Puerto Rico’s money woes and that the consequences of this financial strangulation have been like tentacles affecting the island culture as a whole, and a block on any acceleration in its ability to bring in new investment onto the island.

Photo by Puerto Rican photographer Fernando Ortíz

Puerto Rico wants to play ball, is smart and understands what has become of it. It also would love to abide by its financial commitments. But it is in all kinds of distress at the moment, not to forget mentioning the two major hurricanes that have made landfall within a week of each other. It is constantly depleted of its bright minds because it has not much to offer in terms of financial opportunity and general economic growth. I believe it is time to do away with the 1917 bond law and allow the island to gain a financial footing it has never had. Mr. President, I kindly ask that you and Congress lead the effort to rescind this anchor of a law and allow Puerto Rico to upright itself and sail onto calmer waters.